Morning Report

Morning Report – Friday 19 March

Jon Robson, Head of Trading

“Concerns remain that higher Treasury yields might lead the Fed to taper its ultra-loose monetary policy to contain inflation, despite the continued dovish stance so far, which is providing some support to the dollar. Next week, market participants will hear from Jerome Powell three times, when speaking on central bank innovation on Monday and giving testimony on the policy response to the pandemic on Tuesday and Wednesday.”

Main Headlines

Initial jobless claims in the US unexpectedly rose last week to their highest level in one month, even as states loosen Covid-19 restrictions on businesses. The labour department on Thursday said there were 770,000 new applications for unemployment benefits, higher than the 725,000 claims reported the week before, according to seasonally adjusted figures. The report was weaker than anticipated, with economists forecasting 700,000 weekly claims. About 282,000 people filed for aid through the Pandemic Unemployment Assistance programme, which provides benefits to the self-employed and others who would not qualify for regular benefits. That marked a decrease from the previous week’s 479,000 new claimants. PUA data are not seasonally adjusted.


The Bank of England upgraded its outlook for the UK economy on Thursday, but stressed it was in no hurry to reduce its support to boost the recovery from the coronavirus crisis. After the March Monetary Policy Committee meeting, the central bank said that financial market moves in the past six weeks, which have seen sterling and the cost of government borrowing rise, had been warranted by the better immediate prospects for recovery. In the minutes of the meeting, the BoE followed the US Federal Reserve in not taking any action to return financial market interest rates to the levels in early February.


Sterling is stronger against the dollar and unchanged against the euro this morning. The planned reopening of the British economy, the Budget’s renewed support for workers and businesses, and the rapid vaccine rollout have boosted UK consumer confidence to the highest level since before the first lockdown last March, fuelling hopes of a spending rebound. The UK consumer confidence index rose seven points to minus 16 in March, according to research company GfK. The reading, based on data collected between March 1 and 12, was the largest monthly jump in almost a decade.


The euro is stronger against the dollar and unchanged against the pound overnight. Germany, France, Italy and Spain said they would resume using the Oxford/AstraZeneca coronavirus vaccine after the EU drugs regulator said there was a “clear scientific conclusion” that the jab was “safe and effective”. Emer Cooke, head of the European Medicines Agency, on Thursday said its investigation had concluded that the AstraZeneca vaccine was “not associated” with a potential risk of blood clots noted recently by some scientists, adding that the benefits of the shot outweighed possible risks.


 The dollar was offered against other majors in early morning trading. The US plans to send 4m doses of AstraZeneca’s coronavirus vaccine to Canada and Mexico, the White House has announced, the first time the country has accepted a request to send unused vaccines across its borders. Under the plan, which is being finalised, Mexico would receive 2.5m doses and Canada would get 1.5m, Biden administration officials said on Thursday.


Stocks and European equity futures fell Friday after U.S. shares slid from a record, with Treasury yields hovering around the highest levels in over a year as concerns about faster inflation rattled investors. China’s CSI 300 share gauge slumped as chilly U.S.-China talks soured the mood. Japan’s Topix rallied and the Nikkei 225 sank after the Bank of Japan said it will focus purchases of exchange -traded funds on the former gauge. European contracts retreated and U.S. equity futures fluctuated after the Nasdaq 100 slid 3.1% and the S&P 500 fell 1.5%. U.S. Treasury yields steadied after a spike drove the 10-year benchmark to 1.75% for the first time since January 2020. Crude prices added to a 7% plunge that owed partly to concerns that new virus-related curbs in Europe will sap demand. Gold slipped.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: Germany Feb. PPI

8:00 a.m.: U.K. Feb. Public Finances

11:30 a.m.: Russia rate decision

11:45 a.m.: ECB’s Panetta speaks

12:00 p.m.: U.K. sells bills

2:00 p.m.: BOE’s Cunliffe speaks

5:00 p.m.: Russia Feb. Unemployment, Retail Sales

6:00 p.m.: Baker Hughes U.S. Rig Count

Quadruple witching

Corporate Events

Earnings include Bechtle

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